The measures go substantially beyond the sanctions the United Nations agreed on June 10 and are designed to pressure Tehran to return to talks over a uranium enrichment program Western powers believe is designed to produce nuclear weapons.

Russia said the additional sanctions on top of measures approved by the UN Security Council were "unacceptable."

The EU steps, which could come into force within weeks, will focus on trade, including dual-use items, banking and insurance, Iran's transport sector, including shipping and air cargo, and key sectors of the gas and oil industry.

The energy sector sanctions will prohibit "new investment, technical assistance and transfers of technologies, equipment and services related to these areas, in particular related to refining, liquefaction and Liquefied Natural Gas technology", the EU heads of state and government said in their conclusions.

The measures go beyond what some diplomats had foreseen and are likely to put strong financial pressure on Iran, which is the world's fifth largest crude oil exporter but has little refining capability.

"The European Council deeply regrets that Iran has not taken the many opportunities which have been offered to it to remove the concerns of the international community over the nature of the Iranian nuclear program," the EU leaders said. "Under these circumstances, new restrictive measures have become inevitable."

Diplomats said some EU states, notably Germany, which has large investments in Iran's oil and gas sector, had concerns about strengthening the sanctions, but in the event all EU member states moved quickly behind a strongly worded statement.

Iran denies its nuclear program is aimed at producing weapons, saying it is for energy and other peaceful purposes.

The EU steps coincide with efforts by the US Congress to draw up its own set of additional measures against Iran designed to add bite to last week's UN sanctions package, parts of which were watered down by Russian and Chinese opposition. The political impact of the UN steps was also undermined by Turkish and Brazilian votes against the package.

Criticizing the EU sanctions, a Russian Foreign Ministry statement said: "For us, attempts to place oneself above the Security Council in this way are unacceptable."

It said the additional sanctions would undermine efforts to cooperate on resolving tension over Iran's nuclear program.

Earlier, Russian Deputy Foreign Minister Sergei Ryabkov was quoted Russian news agencies as saying: "We are extremely disappointed that neither the United States nor the European Union is heeding our calls to refrain from such steps."